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Management General, Public Sector Specific

What’s the secret to sustained cost savings?

Last month’s Bain Brief looks at how some organisations are driving costs out of their business and making the savings stick. I’ve been asked to help build many a business case and you sometimes get the feeling the organisation you’re working with knows that they’re inflating the benefits. I’m sure you’ve likely worked in other organisations where there is a continous quest to drive cost out of the business by reducing headcount.

What do the successful companies know that the others don’t?

The companies that achieve it typically follow a common path with four key elements. The cost leaders:

Set targets based on external, market-based data, not on internal benchmarks;
Tailor cost-cutting efforts to their strategy;
Get the metrics right;
Focus on the “seams” of the organization, not just individual units.

Successful companies also know how to make cost-reduction initiatives stick. Rather than relying on exhortation and top-down missives, they launch comprehensive efforts to embed the message in the entire organization. Before long, the company develops a new consciousness—and a new culture—in which keeping costs low is a primary objective. This is the key to delivering sustained cost savings year after year.

Read more here: http://www.bain.com/publications/articles/sustained-cost-transformation.aspx?utm_source=Bain-Insights-Feb-2012&utm_medium=Newsletter&utm_campaign=sustained-cost-transformation

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